$2$ B $.$ Return to question $2$A and show the relationship between average cost$(AC)$ and price demonstrating a firm in monopolistic competition earns zero profits in long run equilibrium.

QUESTION $3$

$3$A$.$ Construct a market diagram for Company MCI in a monopolistic competition situation in long run equilibrium. Identify profit maximizing output and price as q$1$ and p$1.$

$3$B$.$ Return to your market for Company in MCI in $3$A and change the market if overall consumer preference for the industry good increases. Label new curves and new price quantity with subscript $2.$

$3$C$.$ Using the relationship between average cost $($AC$)$ and price, explain whether firm MCI now earns positive, negative, or zero profits.

QUESTION $4$

$4$A$.$ Construct a market diagram for airline company AAA in a monopolistic competitive airline industry earning positive profit. Identify the profit maximizing output and price as q$1$ and p$1.$

$4$B$.$ Return to the market for Company AAA in $4$A and change the market if the price of jet fuel increases. Label new curves and new price quantity with subscript $2.$

$4$C$.$ Using the relationship between average cost $($ AC $)$ and price, explain whether the firm is now earning positive, negative, or zero profits.